He then was active in leading the conquest of Cuba in 1511 under orders from Diego Columbus, recently restored as Viceroy of the Indies. He founded a number of new Spanish settlements and cities on the island, first Baracoa in 1511 and then most notably Santiago de Cuba in 1514 and Havana in 1515. Velázquez was appointed governor of Cuba.[1]:16 The new settlers did not wish to be under the personal authority of Diego Columbus, so Velázquez convoked a general cabildo (a local government council) which was duly authorized to deal directly with Spain, and therefore removed Velázquez and the settlers from under the authority of Columbus, their nominal superior. It was a precedent that would come back to haunt him with the Mexican adventures.

Noting the weakness of the natives, Velázquez authorized the importation of black slaves in 1513. He authorized various expeditions to explore lands further west, including the 1517 Francisco Hernández de Córdoba expedition to Yucatán (see: Spanish Conquest of Yucatán), and Juan de Grijalva's 1518 expedition.[1]:16,27 He was made the 1st Adelantado of Cuba with jurisdiction over the former Governorship of the Indies.[1]:126 He initially backed Hernán Cortés's famous expedition to Mexico,[1]:44-47 but pulled back his support before the expedition was scheduled to launch and then that was the end. Cortés disobeyed Velázquez's orders to disband his expeditionary force and left for Mexico anyway.[1]:56